Covad cites BlueStar shutdown for Q2 losses
Covad Communications saw a $175.5 million net loss on revenue of $87.1 million in its second quarter, citing charges connected with shutting down its BlueStar subsidiary as a key reason.
The company, which filed for a Chapter 11 bankruptcy in mid-August and negotiated with bondholders to reduce its $1.4 billion debt, did see its revenue grow 22 percent over its first-quarter results and jump 101 percent over the $43.2 million it reported for second-quarter revenue a year ago.
Covad's $175.5 million, or $1.01 per share, net loss was significantly wider than its $153 million, or $1 a share, net loss a year ago. Operations also showed a loss — $141.8 million — but that was narrower than the $152.7 million loss a year ago.
Losses stem partly from a Q2 restructuring charge of $2.9 million and $2.2 million from the write-down of goodwill entailed in shutting down its BlueStar subsidiaries, a move that will save $75 million in the next year, the company says.
Likewise, subscriber lines in service as of June 30 were up 141 percent from 138,000 a year ago, but grew only 4 percent from the 319,000 reported at the end of Q1 2001.
Covad recently filed for Chapter 11 bankruptcy as part of its effort to negotiate with bondholders and eliminate its $1.4 billion debt. It also recently settled a securities class-action lawsuit in a California federal court.
Finally, the company said it expects no revenue growth between its second and third quarters, but does expect loss from operations to continue narrowing. Covad President and CEO Charles Hoffman says the bankruptcy and settlement will help in raising the $200 million it needs to show a positive cash flow by the third quarter of 2003.